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A4021
ASSEMBLY, No. 4021
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 12, 2026
Sponsored by:
Assemblyman� ALEX SAUICKIE
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
���� Provides CBT and gross income tax credits for certain
energy infrastructure upgrades.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
providing tax credits for certain energy
infrastructure upgrades and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.)
and Title 54A of the New Jersey Statutes.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� a.� As used in this
section:
���� �Board� means the Board of
Public Utilities.
���� �Director� means Director of
the Division of Taxation in the Department of the Treasury.
����
�Division�
means the Division of Taxation in the Department of the Treasury.
���� �Generator�
means a person who owns or operates an electric energy generation facility in
the State that produces electric energy for sale.
���� b.� For privilege periods
beginning on or after the January 1 next following the effective date of
P.L.��� , c.��� (C.�������� ) (pending before the Legislature as this bill),
and subject to the limitations of subsection c. of this section, a taxpayer who
is a generator and who demonstrates a five percent increase in electric energy
generated pursuant to paragraph (1) of this subsection shall be allowed a
credit against the tax imposed pursuant to section 5 of P.L.1945, c.162
(C.54:10A-5), to be calculated as provided in paragraph (2) of this subsection,
to compensate the taxpayer for certain costs incurred in the installation and
deployment of upgrades to an existing electric energy generation facility.
���� (1) To qualify for the tax
credit allowed pursuant to this section, a taxpayer shall apply, in a form and
manner determined by the board, to the board for a certification that provides:
(a) the upgrades made to the existing electric energy generation facility owned
or operated by the taxpayer; (b) the amount, in kilowatt hours, of electric
energy produced as a result of the upgrades along with the amount, in kilowatt
hours, of electric energy produced annually prior to the upgrades; and (c) the
amount of the tax credit calculated pursuant to paragraph (2) of this
subsection.�
���� The application to the board
shall demonstrate how the upgrades were able to create an increase, at a
minimum of five percent, of electric energy produced for sale.� These upgrades may
include, but are not limited to: improving energy efficiency, enhancing grid
technologies, integration of distributed energy and storage resources, and
increased integration of utility-scale renewables and storage.� The application
shall include receipts and documentation identifying the type and cost of each
upgrade necessary to increase electric energy production, and any other
information determined to be relevant by the board.� The board shall transmit a
copy of any certification issued pursuant to this subsection to the taxpayer
and the director.
���� (2)� The amount of the credit
authorized pursuant to this section shall not exceed the lesser of:
���� (a) 75 percent of the total
costs incurred by the taxpayer after the effective date of
P.L. ,
c. (C. )
(pending before the Legislature as this bill) for upgrades to the generator�s
electric power generation system, including any permit costs as required by the
State or local government; or
���� (b) $5,000,000.
���� c.� The director shall
prescribe the order of priority of the application of the tax credit allowed
pursuant to this section, and any other credits allowed against the tax imposed
pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for the privilege period.�
The amount of the credit applied under this section against the tax imposed
pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period,
together with any other credits allowed by law shall not reduce the tax
liability to an amount less than the statutory minimum provided in subsection
e. of section 5 of P.L.1945, c.162 (C.54:10A-5).� The amount of the tax credit
otherwise allowable under this section which cannot be applied for the
privilege period may be carried forward, if necessary, to the four privilege
periods following the privilege period for which a portion of the tax credit
was allowed.
���� d.� The value of tax credits
provided by the director pursuant to this section and pursuant to section 2 of
P.L. ,
c. (C. )
(pending before the Legislature as this bill) shall not exceed a cumulative
total of $100 million.
���� e.� No tax credit shall be
allowed pursuant to this section for any costs or expenses included in the
calculation of any other tax credit or exemption granted pursuant to a claim
made on a tax return filed with the director, or included in the calculation of
an award of business assistance or incentive, for a period of time that
coincides with the privilege period for which a tax credit pursuant to this
section is allowed.
���� f.�
The
board, in consultation with the director, shall adopt, pursuant to the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.),
rules and regulations as are necessary to implement the provisions of this
section.
���� g.�
No
later than five years after the effective date of this section, the division
shall prepare and submit to the Governor, the State Treasurer, and, pursuant to
section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that,
at a minimum, summarizes the effectiveness of the tax credit in incentivizing
upgrades to existing electric energy generation systems.
���� 2.��� a.
�
As used in this section:
���� �Board� means the Board of
Public Utilities.
���� �Director� means Director of
the Division of Taxation in the Department of the Treasury.
����
�Division�
means the Division of Taxation in the Department of the Treasury.
���� �Generator�
means a person owning, controlling, or operating a facility that produces
electric energy for sale.
���� b.� For privilege periods
beginning on or after the January 1 next following the effective date of
P.L.��� , c.��� (C.�������� ) (pending before the Legislature as this bill), and
subject to the limitations of subsection d. of this section, a taxpayer who is
a generator and who demonstrates a five percent increase in electric energy
generated pursuant to paragraph (1) of this subsection shall be allowed a
credit against the tax otherwise due under the �New Jersey Gross Income Tax
Act,� N.J.S.54A:1-1 et seq., to be calculated as provided in paragraph (2) of
this subsection, to compensate the taxpayer for certain costs incurred in the
installation and deployment of upgrades to an existing electric energy
generation facility.
���� (1) To qualify for the tax
credit allowed pursuant to this section, a taxpayer shall apply to the board,
in a form and manner determined by the board, for a certification that
provides: (a) the upgrades made to the existing electric energy generation facility
owned or operated by the taxpayer; (b) the amount, in kilowatt hours, of energy
produced as a result of upgrades along with the amount, in kilowatt hours, of
electric energy produced annually prior to the upgrades; and (c) the amount of
the tax credit calculated pursuant to paragraph (2) this subsection.�
���� The application to the board
shall demonstrate how the upgrades were able to create an increase, of at least
five percent, in electric energy produced for sale.� These upgrades may include,
but are not limited to: improving energy efficiency, enhancing equipment
technologies, integration of distributed energy and storage resources, and
increased integration of renewable energy sources and storage systems.� The
application shall include receipts and documentation identifying the type and
cost of each upgrade necessary to increase electric energy production and any
other information determined to be relevant by the board.� The board shall
transmit a copy of any certification issued pursuant to this subsection to the
taxpayer and the director.
���� (2) The amount of the credit
authorized pursuant to this section shall not exceed the lesser of:
���� (a) 75 percent of the total
costs incurred by the taxpayer after the effective date of
P.L. ,
c. (C. )
(pending before the Legislature as this bill) for upgrades necessary to
increase power production and electricity to the grid, including any permit
costs required by the State and local government; or
���� (b) $5,000,000.
���� c. �The order of priority of
the application of the credit allowed pursuant to this section, and any other
credits allowed against the tax imposed pursuant to N.J.S.54A:1-1 et seq. for a
taxable year, shall be as prescribed by the director.� The amount of the credit
applied under this section against the New Jersey gross income tax imposed
pursuant to N.J.S.54A:1-1 et seq. for a taxable year, when taken together with
any other payments, credits, deductions, and adjustments allowed by law, shall
not reduce a taxpayer's tax liability to an amount less than zero.� The amount
of the tax credit otherwise allowable under this section which cannot be
applied for the taxable year due to the limitations of this section or other
provisions of N.J.S.54A:1-1 et seq. may be carried forward, if necessary, to
the four taxable years following the taxable year for which the tax credit was
allowed.
����
d.�
No
tax credit shall be allowed pursuant to this section for any costs or expenses
included in the calculation of any other tax credit or exemption granted
pursuant to a claim made on a tax return filed with the director, or included
in the calculation of an award of business assistance or incentive, for a
period of time that coincides with the taxable year, for which a tax credit
authorized pursuant to this section is allowed.
���� e.� The value of tax credits
provided by the director pursuant to this section and pursuant to section 1 of
P.L. ,
c. (C. )
(pending before the Legislature as this bill) shall not exceed a cumulative
total of $100 million.
���� f.� (1) A business entity that
is classified as a partnership for federal income tax purposes shall not be
allowed a tax credit pursuant to this section directly, but the amount of tax
credit of a taxpayer in respect to distributive share of entity income, shall
be determined by allocating to the taxpayer that proportion of the tax credit
acquired by the entity that is equal to the taxpayer�s share, whether or not
distributed, of the total distributive income or gain of the entity for its
taxable year ending within or with the taxpayer�s taxable year.
���� (2) A New Jersey S Corporation
shall not be allowed a tax credit pursuant to this section directly, but the
amount of the tax credit of a taxpayer in respect of a pro rata share of S
Corporation income, shall be determined by allocating to the taxpayer that
proportion of the tax credit acquired by the New Jersey S Corporation that is
equal to the taxpayer�s share, whether or not distributed, of the total pro
rata share of S Corporation income of the New Jersey S Corporation for its
privilege period ending within or with the taxpayer�s taxable year.
���� g.�
The
board, in consultation with the director, shall adopt, pursuant to the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.),
rules and regulations as are necessary to implement the provisions of this
section.
���� h.�
No
later than five years after the effective date of this section, the division
shall prepare and submit to the Governor, the State Treasurer, and, pursuant to
section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that,
at a minimum, summarizes the effectiveness of the tax credit in incentivizing
upgrades to existing electric energy generation systems.
����
���� 3. This act shall take effect
immediately.
STATEMENT
���� This bill establishes tax
incentives for taxpayers whose upgrades to existing energy infrastructure
creates an increase in electricity to the grid.� Specifically, the bill
provides a tax credit against the corporation business tax and the gross income
tax based on the costs of upgrades which result in an increase of at least five
percent in energy generation that is transmitted to the State�s electrical
grid.� The tax credit is available to anyone who is a generator and
demonstrates a five percent increase in electric energy.� The bill defines
generator as
person owning, controlling, or operating
a facility that produces electric energy for sale.�
The amount of the
credit is equal to the lesser of: 75 percent of the total costs of upgrades
made after the bill�s effective date or $5,000,000.�
���� Under the bill, the taxpayer
is required to provide the Board of Public Utilities (BPU) a certification that
shows: 1) the upgrades made to the existing energy production infrastructure
owned and operated by the taxpayer; 2) the amount, in kilowatt hours, of energy
produced as a result of upgrades along with the amount, in kilowatt hours, of
energy produced prior to the upgrades; and 3) the amount of the tax credit.�
The application to BPU should demonstrate how exactly the upgrades were able to
create an increase, of at least five percent, in electricity transmitted to the
grid.� These upgrades may include, but are not limited to: improving energy
efficiency, enhancing equipment technologies, integration of distributed energy
and storage resources, and increased integration of renewable energy sources
and storage systems.� Additionally, the application should include receipts and
documentation identifying the type and cost of each upgrade necessary to
increase power production and any other information determined relevant by the
board.�
���� The bill requires BPU to
transmit a copy of any certification issued to the taxpayer and the Director of
the Division of Taxation in Department of the Treasury (director).�
The bill would also limit the cumulative total of tax
credits awarded pursuant to the bill to $100 million.
� The bill would
require, no later than five years after the bill�s effective date, the division
to prepare and submit to the Governor, the State Treasurer, and the Legislature
a report that, at a minimum, summarizes the effectiveness of the tax credit in
incentivizing upgrades to existing energy generation infrastructure.� Finally,
the bill directs BPU, in consultation with the director, to adopt rules and
regulations to effectuate the provisions of the act.